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Hey, what’s up everybody? This is Ryan Enk with Cash Flow Dad Life. Today we’re going to be talking about the stock market. The stock market plunged 834 points yesterday. Ouch.
So I brought in an expert…
He was super hard to get ahold of. His schedule is incredibly busy. Please welcome to the show, my son, Caleb Enk is 10 years old…Say, “What’s up?”
Caleb Enk: What’s up!
Ryan Enk: So just to give you kind of the backstory on the stock market with me and Caleb here is I don’t like investing in stocks. I’m more of a real estate guy. That being said, I do invest in stocks. It’s just part of diversifying your portfolio.
But the reason that it’s not a major part of my portfolio is because stocks are so… It’s not real. It’s not a real asset. And I don’t know if you’ve heard that comment before.
The first time I heard this, it blew my mind and the comment was that money isn’t real. You know? And, and if you just sit there and think about that for a second. Money isn’t real.
It’s just a medium of exchange…
And nothing proves that money isn’t real anymore than the stock market, where yesterday all of a sudden trillions of dollars are lost. And for what? And for what? Cause there’s no asset value behind it. There is no nothing real behind that.
Now real estate, I love because it’s real, but like I said, I still invest in the stock market and I encourage all my kids to know how to invest in the stock market as well and because it is a tremendous wealth creator, if you know how to do it right, the problem is that most people overcomplicate things and really all it comes down to is figuring out what most entrepreneurs, most investors do.
How can you minimize your risk while maximizing your returns? So I brought on my 10 year old to kind of explain some of the concepts that he knows. It’s so easy that even a 10 year old can do it.
But actually he started when he was eight years old…
Caleb, can you share with everybody kind of the story on how you get started investing in the stock market?
My Dad told us we need to clean the garage, but the garage had so much things clutter around and stuff in it, so we complain. Then my dad says, “If you cleaned the garage, I’ll give you $10, but $100 in your bank accounts, you can buy stock.” So we agreed with that…
So we clean the garage and then he decided to analyze stocks to see which one is done best.
When you analyze is when you look at how the stock has done before and so you figure out if you want the stock because of how good it’s been doing or how bad it’s been doing, but another key thing you want to be looking for in a stock is a dividend and this is when you get a certain amount of money a week or a month, no matter how the stock is doing.
And I ended up picking Chevron as my stock because I looked back and analyzed it, and it did pretty good before, and it also has been doing pretty good for me.
Ryan Enk: So the principle in buying any stock is that you want to buy it and sell it. So you want to what at a low price and what at a high price?
Caleb Enk: You want to buy low and sell high.
Ryan Enk: So if the stock say it sells between $20 and $40 and right now it’s at $38. Do you want to buy that now?
Caleb Enk: No
Caleb Enk: Because it’s too high right now.
Ryan Enk: When the stock market crashes like yesterday, is that a good time to buy?
Caleb Enk: Kind of…
Ryan Enk: And why do you say, “Kind of?”
Caleb Enk: Because when it goes down it seems to go up, but it’s also risky and it might just keep on plunging down…
Ryan Enk: Yeah. So you kind of want to wait for it to kind of shoot up a little bit before you buy, right?
Caleb Enk: Yeah, it’s called a market adjustment, like halfway up its little trail.
Ryan Enk: And so one of the things that’s very similar to real estate in the stock market is this concept of dividends. When you buy a real estate property, like a single family home and you’re getting rent, that’s the same as like a dividend.
You’re getting money every month from your investment…
So what you want to do is you want to take that dividend in stocks, you want to make sure that that stock has a dividend that’s like having a house that’s got rent that’s coming in, right? What happens if, what happens if you don’t buy a stock, has a dividend?
Caleb Enk: Well, if it goes low, you have nothing, you don’t get anything and you just spent your money on something but you’re not getting anything back. So you look for a dividend stock.
Ryan Enk: Yeah, you don’t want to be holding the bag on something which is basically stock plunges, but you’re not getting paid every single month or every single quarter while it’s low.
When the, when the real estate market tanked in…eight, a lot of people who were landlords still made a lot of money in real estate because they were, um, they were still getting paid their monthly dividends. And so they just waited for the market to correct itself and get back up.
But people were holding stuff without rental income coming in or trying to flip stuff. Those are the people who really lost a lot of money. So tell us why you decided to buy Chevron. First of all, how many shares did you buy it at? What price?
Caleb Enk: Nine shares at $95.
Ryan Enk: Wow. Nine shares at $95. And do you know what it is today even though the stock market fell? Do you know what Chevron’s at today? When was the last time you checked?
Caleb Enk: Two days ago.
Ryan Enk: Let’s look real quick. It just, it just fell tremendously…
In fact, it just fell four dollars, but it’s still at $122 and sixty cents. So you’ve made some money on that stock buddy. That was a good pick
Caleb Enk: Because it was doing good in the past time and when I analyzed it it was only, it’s like halfway up at the time. So I decided I should buy this stock because it also has a dividend. So I decided I should buy stock in Chevron. Plus my grandpa works there.
Ryan Enk: So every time we drove by a gas station at Chevron he was like, “We got to go there.”
Which isn’t quite how it works. It’s not totally how it works. But the profitability of a company definitely helps. The stocks go up. All right, well cool. Caleb, do you have any more advice for everybody as far as like just general financial advice? Say someone gets $100 for doing something. What should they do with that money?
Caleb Enk: Save it. Invest it. Maybe spend a little bit of it.
Ryan Enk: Yeah. If you had $100 right now, what would you spend it on?
Caleb Enk: Probably. I’m not going to lie. Probably our board.
Ryan Enk: Alright, well there you have it guys. Stock investing advice from a 10-year-old. It really is that simple. Buy Low, sell high and um, and try to get something with the dividends so you’re not holding the bag on it.
And f you just keep it simple, that’s a, that’s really the best way to make money in the stock market. And my 10-year-old has made money even though the stocks dipped $850 from a, from yesterday. There are also, there are also some really cool things to do in the stock market. For example, you can do something called a stop loss.
So if you bought something at $95, you can say, hey, if it goes to $90, I want this thing to automatically sell. There’s another thing you can do cold, a trailing stop loss. So basically you could say, if I bought this at $90, I want to only sell when it decreases by five percent.
So what happens is if it goes up to 105, it goes to five percent from 105. If it goes up to 120, it goes five percent from 120. So you can actually have it trailing as it goes up. So you’re not losing that money. You’re capturing those profits as it goes up. And there’s another thing that I’m looking at now, uh, something worth youtubing.
Again, I’m not by any means an expert in the stock market. Real estate is my thing. I like real things. But, uh, I do have a couple tips and tricks. There’s another one called selling naked puts. So basically what that is, is, you know, if you really wanted to buy something, say apple and I don’t know what apple is, that right now, let’s just say it’s at $500, but you wanted to buy it at 4:50, she put in an order to buy it.
If it reaches at 4:50 and then you sell your order by writing a naked putt on it. Basically what that means is that someone’s going to pay you for the right to sell it to you at that discounted price. So now you’re thrilled because you bought it at that price. You wanted to buy it out if it dips down.
But in the meantime, you’re making money by someone paying for the right to sell it to you at that price. So there are all kinds of cool things to do on the stock market. Things to make money no matter what happens.
I’m by no means an expert, but again, guys, money, it’s not real….
And you just got to be careful. Don’t panic. Times where the stock market market plunges today, a really good investors, they look at things and they say, all right, when they’re down, like the BP oil spill for example, you know, bad news happens. Markets dip.
I think the market dip yesterday because uh, the raising of the feds rates, that’s where people are saying about it. That’s okay, don’t panic, wait for it to bounce back a little bit. And then it’s time to buy.
So. Alright guys, any other words of wisdom Caleb before I drop you off at school?
Caleb: Make sure there’s always a dividend if you don’t have a dividend, it’s just stupid…Goodbye.
Ryan Enk: Caleb is really high on dividends. So. Alright guys, thanks a lot.
Thanks for listening. Please remember to rate and subscribe. You’re going to want to listen to every episode as soon as it comes out. It hasn’t been an idea or strategy that can literally change your life.
Listen, don’t miss out on the free investor pools that I have on my website https://cashflowdadlife.com/. So go to https://cashflowdadlife.com/ gets a free swag and lists and hit me up. If you want to talk about how we can get you out of the rat race as soon as possible. Until next time. My name is Ryan Enk and this was Cash Flow Dad Life!